Question
Jiminy's Cricket Farm issued a 30-year, 6.3 percent semiannual bond 7 years ago. The bond currently sells for 107.8 percent of its face value. The
Jiminy's Cricket Farm issued a 30-year, 6.3 percent semiannual bond 7 years ago. The bond currently sells for 107.8 percent of its face value. The book value of this debt issue is $149 million. In addition, the company has a second debt issue, a zero coupon bond with 11 years left to maturity; the book value of this issue is $93 million, and it sells for 62.2 percent of par. The companys tax rate is 24 percent.
1. What is the total book value of debt? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)
2. What is the total market value of debt? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)
3. What is the aftertax cost of the 6.3 percent coupon bond? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
4. What is the aftertax cost of the zero coupon bond? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
5. What is the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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